Thai telecoms shares fall on concerns bids for 4G licences too high


BANGKOK: Shares in Thailand’s leading telecoms operators slumped on Thursday on concerns they may end up paying too much for 4G mobile licences at a hotly contested auction.

Thailand’s 4G spectrum auction has attracted bids worth more than 74 billion baht (RM8.99bil) for the two licences on offer, the nation’s telecoms regulator said.

The regulator ordered a three-hour break in the bidding process after 25 hours of bidding that pushed up the price for the 1,800 MHz frequency to 37 billion baht (RM4.5bil) per licence, versus a base price of 15.91 billion baht (RM1.93bil) and analyst estimates of 22 billion baht (RM2.67bil).

The four operators vying to win the licences are Advanced Info Service Pcl (AIS), True Corp, Total Access Communication (TAC) and Jasmine International .

“The spectrum auctions are shaping up to be far more expensive than what we or the street had initially envisioned given the participation of Jasmine International,” Arthur Pineda, analyst at Citigroup said in a note.

Pineda said the expensive licences could lead to a possible earnings downgrade of operators as companies will shoulder higher financial expenses and amortisation costs that will drag down their profitability.

Thailand’s tech bellwether ICT index slid 4.5% to the lowest since January 2014, led by sharp declines in AIS and True.

Market leader AIS slipped 6% to a 14-month low of 212 baht, while third-ranked True lost 6.5% to a two-and-a-half-month low of 9.30 baht. AIS and True are most likely to win the two licences of the 1800 MHz frequency, analysts said.

Shares in second-ranked TAC, controlled by Norway’s Telenor, fell 6% to a four-week low, while Jasmine dropped 4.6% to three-month low.

The new 4G spectrum will enable companies to expand network capacity and tap robust demand for mobile data in a saturated market, where mobile phone penetration is more than 140%.

AIS, 23% owned by Singapore Telecommunications Ltd, is the only major Thai operator that does not offer a 4G service.

AIS, which has the largest subscriber base but limited bandwidth capacity, is badly in need of new spectrum to roll out 4G services and to compete with smaller rivals TAC and True.

True Corp, 18% owned by China Mobile and controlled by billionaire Dhanin Chearavanont’s Charoen Pokphand Group, needs a licence to maintain its leading position in 4G services, analysts said. - Reuters

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